While it might not seem urgent to a company just entering the import business, incorrectly classifying goods brought into Canada can compound as the stream of imports grows and, if not spotted in time, end up costing them in overpaid duty they can’t recover or penalties for underpaid duty.
Even seasoned importers don’t always pay enough attention to their imports’ classifications. For example, a poor translation into English cost one company that was importing gears when it incorrectly identified them as grease dispensers on the customs documents. The mistake went unnoticed for several years and resulted in a retroactive assessment of more than $50,000 in duty plus interest.
Problems also can arise when importers don’t question classifications by U.S. Customs. Canada Customs does not accept these classification rulings, although they can be used in research to help determine the correct tariff classification. For example, one Canadian company relied on a U.S. ruling provided by a related company that classified parts for a coffee maker as duty free. When Canada Customs examined the transaction, they changed the classification, resulting in a rate of 6.5% being applied to four years of imports, resulting in duty owing of more $300,000 plus interest. Read more here.